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Major gifts can be a game-changer for an organisation’s fundraising. They are usually the largest donations an organisation receives and provide an opportunity for the donor to be a significant partner in the organisation’s mission. Major gift fundraising is an area of strong growth in Australia. One of the key reasons for this is the highly attractive return on investment.

Recent Australian studies into charitable giving have identified a shift in giving trends towards big gift fundraising. And with good reason, it seems. According to QUT’s Giving Australia 2016 report, fewer people are giving more and there has been a reduction in the number of Australians who give, yet the average donation grew 37% in the four years to 2016.

Koda Capital’s Snapshot of Giving 2018 reported that tax deductible claims for charitable gifts were down by 7.2%, but donations via private ancillary funds (the giving mechanism favoured by many significant philanthropists) have almost tripled in the past six years.

It was a recent American study (Sargeant, A., Eisenstein, A., & Kottasz, R. 2015. Major gift fundraising: Unlocking the potential for smaller nonprofits) analysing major gifts data from 300-plus small organisations that inspired Xponential Strategy Director, Roewen Wishart, to address the gap in Australian knowledge and develop a study that would shed light on the local major gift landscape.

Xponential’s research associate Dr Murray Rees and I worked with Roewen to deliver the first Australian Major Gifts Benchmarking Study. Organisations participating in what is set to become an annual study included: Amnesty International Australia; Brisbane Legacy; Bush Heritage Australia; Guide Dogs NSW/ACT; Guide Dogs QLD; Mater Foundation; Multiple Sclerosis Limited; Oxfam Australia; Peter MacCallum Cancer Foundation; Surf Life Saving Foundation; and The Women’s Foundation.

The fundraising revenue of participating organisations ranged from $3 million to $50 million, and their major gifts programs varied in maturity, resourcing and investment.

While a number of these organisations have several dedicated major gift relationship managers, three of those in the study currently invest minimal leadership and executive time in major gift fundraising. Although these less-resourced organisations reported that they were looking to recruit and invest to expand their programs.

Thus, the results of the inaugural Australian Major Gifts Benchmarking Study can be used in five key ways:

  1. To measure and benchmark program
    performance over time.
  2. To inform management decisions (such as
    portfolio size).
  3. To inform investment for growth.
  4. To identify strengths and risks for
    management.
  5. To educate internal stakeholders about best
    practice in major gifts fundraising.

THE RESULTS

The study benchmarked key organisational statistics such as fundraising revenue and staff, active donor counts and the donor status of board members. It also included metrics related to donor numbers and retention rates, as well as quantitative data including methods to identify prospects and cultivation and stewardship activities.

It sought insights into:

  • Year-on-year retention.
  •  Portfolio size per full-time major gift fundraiser.
  • Typical definition of a major gift.
  • Where organisations find new prospects.
  • The impact of board involvement.
  • Return on investment.
  • Length of time between prospect identification and first major gift.
  • Typical retention rates.

Correlations were investigated between major gift program success and variables such as: board and volunteer involvement; organisation subject matter; training; size of total fundraising revenue; methods of solicitation; and longevity of tenure of major gifts staff. ‘Success’ of a major gift program was above average net and gross program income, total active major donor count, and retention by count. In 2019, it is intended that return on investment will also be a success variable.

To protect the value of the study and the confidentiality of the data, only participating organisations receive the full benchmarking study report. However, there are some interesting high-level insights that I can share from the study.

SUCCESSFUL STEWARDSHIP

The study identified an interesting correlation between organisations that have volunteer involvement in their major gifts programs and have higher retention rates. Volunteer involvement can come in many forms, including administration and research, but the study posits that it is the exposure of peer volunteer work that provides an endorsement and instils trust in the organisation. That could be as simple as a thank-you call from a board member, or their presence during a donor stewardship or cultivation tour/presentation.

This finding is consistent with conventional understanding of the value of volunteer involvement in organisational credibility and linkage to donors.

RETURN ON INVESTMENT

Return on investment (ROI) varied significantly. The top return was a staggering $34 for every dollar spent: more than double all other participant organisations. The second best ROI came from an organisation with less than $5 million in fundraising revenue: a nimble and major gifts focused organisation that secures almost 80% of its fundraising revenue from major gifts income.

Both these organisations had well above study average year-on-year retention by value, and on or above the study average retention by count. This demonstrates that successful major gift fundraising is not reserved for big organisations with large teams, but that when the right systems, cultivation and stewardship are in place, major gift fundraising can work for organisations of any size.

DEFINING MAJOR DONORS

Major donors are defined by using a monetary threshold and a counting definition, for example $5,000-plus given as a single gift at any time. The study allowed organisations to answer the study questions according to their own definition to simplify the data input.

Understanding how others define ‘major donors’ was a point of interest going into the study, with some believing that the dollar threshold would correlate with success. Despite a range of six different definitions and four dollar thresholds ranging from $1,000 to $20,000, this had no impact or correlation with other variables. It will be interesting to see if this result fluctuates in future benchmarking studies.

WHO IS DONATING?

Organisations in the study had an average of 156 active major donors. The split by gender of individual major donors showed an equal number of women and men giving large gifts to these organisations. Common observation or anecdote might suggest the results would be more heavily weighted towards men.

BEST METHODS OF SOLICITATION

Participant organisations ask for major gifts in several ways including through a range of fundraising events, and by direct mail and email. In a few cases, major gifts were unsolicited. By far the most successful method of solicitation observed was individual and in-person. Across the study, revenue from personal solicitation was 14 times more than the next best solicitation method (events). This reinforces the common best practice knowledge that individual solicitation is the most effective form of asking major donors for significant and impactful gifts.

The average individually solicited donation was 50% higher than event gifts and almost four times higher than DM/eDM gifts. Interestingly, the average unsolicited major gift came in at 87% of individually solicited gifts, higher than both events and DM/eDM donations. ‘Events’ included gala dinners, small major donor events, and major gifts to peer-to-peer, community and adventure fundraising activities.

MORE FUNDRAISERS, MORE DONATIONS

As fundraisers, our study team were pleased to observe that, yes, more fundraising staff and volunteers correlated to more donations! The status of staff and volunteers was less important than the number of full-time equivalent fundraisers, although volunteer time amounted to just 8% of total staff time at the organisations involved (community fundraising and lottery staff were not included in the data).

DONATING BOARD MEMBERS

Notably, the 2018 study did not find any correlation between board involvement and the ‘success’ variables. It did show that an average of 50% of board members are donating, and two organisations’ directors are all donors (no donor names or amounts were disclosed to Xponential by study participants). Common anecdote suggests that this is an improvement on previous years and that directors are investing more into the organisations that they loyally volunteer their time with.

Sargeant, Eisenstein and Kottasz’s 2015 study on small organisations in the US found that fundraisers with longer tenure raise more money, and that each additional form of professional development is associated with an additional US$37,000 in donations (everything from conferences to webinars). Neither of these findings came through in the 2018 study, but we will continue testing if this is also true in Australia.

The Australian Majors Gift Benchmarking Study provided participants with qualitative and quantitative data on which to make informed decisions on future major gift program investment and best practice for gift solicitation and relationship management.

To learn more, or to reserve your place to participate in the 2019 study, contact Roewen Wishart or Tessa Irwin at Xponential.


Tessa Irwin

Tessa is a Consultant at Xponential and co-author of the Australian Major Gifts Benchmarking Study. She is an FIA NSW Committee Member and co-founded the Philanthropy [major gifts] Special Interest Group, Sydney.

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